A personal injury claim used to be a private matter among a plaintiff, a lawyer, and an insurer. Today it can be raw material for a financial product. Across the United States, third-party investors advance cash against the expected payout of someone else’s lawsuit, then collect a share of the settlement, and a growing slice of that activity is now being bundled, rated, and sold to institutions hunting for yield. The business has a name, litigation funding, and by the last public count it represented a $16.1 billion pool of assets under management in commercial cases alone[s].
That figure, reported by the analytics firm Westfleet Advisors for the year ending mid-2024, was up from less than $10 billion five years earlier. It also leaves out the consumer side: the fast-cash advances handed directly to injured plaintiffs. The effect is an industry that has turned lawsuits into an asset class, and in 2026 it has become a contested fight in American civil justice.
How Litigation Funding Became a High-Yield Asset
Litigation funding spans three distinct markets, and treating them as interchangeable is a common error in the debate.
At the retail end is consumer pre-settlement funding. An injured plaintiff waiting on a claim takes an advance to cover rent, groceries, or medical bills. Because the money is repaid only if the case succeeds, it is written as a non-recourse purchase rather than a loan, which lets it sidestep the interest-rate caps and usury rules that govern ordinary consumer credit. The Medical Professional Liability Association, an insurer-side group that wants tighter rules, describes this fast-cash funding as “analogous to pay-day lending,” charging “sky-high interest rates and fees” with no caps[s].
The second market is commercial litigation finance: patent suits, antitrust claims, and large commercial disputes, where a funder commits millions to a single case or to a portfolio of unrelated cases at once. This is where the $16.1 billion sits. Westfleet counted 39 active commercial funders, with single-matter deals averaging $4.5 million in 2025 and portfolio transactions averaging $19.6 million; portfolio deals made up 64% of new commitments[s]. The American Security Project, in a 2023 baseline, recorded $15.2 billion across 39 funders and 353 investments, with patent cases drawing 19% of capital[s].
The bridge between “personal injury” and “asset class” is the mass tort. Product-liability claims such as the Roundup litigation against Bayer AG and the talc suits against Johnson & Johnson are personal-injury cases at their core, yet they are financed at portfolio scale by institutional money. The U.S. Chamber of Commerce’s Institute for Legal Reform, which lobbies for restrictions, says such cases have drawn backing from Fortress Investment Group, “which is predominantly owned by an Abu Dhabi sovereign wealth fund,” and cites roughly $16 billion held by 42 funders in commercial cases in 2024[s].
A newer market turns the first two into securities. In a contributed analysis, an executive at the firm Market Securities describes packaging legal-finance receivables, including pre-settlement plaintiff advances and contingent-fee arrangements with law firms, into rated asset-backed securities. Insurers and other rated-mandate investors buy the investment-grade tranches at 125 to 200 basis points over Treasuries; private credit managers, sovereign wealth funds, and family offices take the middle; and specialist legal finance investors sit in the junior and equity tranches, “underwriting legal risk directly and targeting returns in excess of 25%”[s]. The same analysis notes that private bonds now make up about 46% of U.S. life insurers’ bond portfolios, up from 29% a decade ago, and frames the move into legal-finance ABS as “structural rather than cyclical.” That is the moment a plaintiff’s lawsuit becomes, in effect, a bond on an insurer’s balance sheet.
Who Profits When the Settlement Lands
Where the money ends up is the heart of the fight, and the critics’ file is not empty. The Chamber’s legal-reform arm points to the British Post Office scandal, dramatized in the series “Mr. Bates vs. The Post Office,” in which funders and plaintiffs’ lawyers “took more than 80 percent of the settlement before the postmasters saw one penny”[s]. A consumer-reform group reports that court documents show some plaintiffs “who won millions walking away with nothing,” their settlements “consumed by litigation loans accruing interest at rates approaching 100% annually”[s].
Funders and their allies answer with a case that deserves a fair hearing. Litigation funding, they argue, is access to justice: it lets an under-resourced plaintiff stand up to a deep-pocketed defendant, and lets a company pursue a valid claim it could not otherwise afford to bring. Because consumer funding is non-recourse, a plaintiff who loses owes nothing, and the advance can cover rent and utilities so an injured claimant is not forced into an early, lowball settlement just to make ends meet, the argument the industry trade group made when New York passed its new consumer law[s]. Defenders also note that only 4% to 5% of funding requests are ever financed, because funders back claims they judge especially likely to win and write off the rest.
The sharper question is control. The industry casts itself as a passive investor; reform advocates say that is not always true. In a prominent example, the food distributor Sysco “argued in court that Burford prevented it from accepting reasonable settlements in its own antitrust litigation, effectively trapping Sysco in a lawsuit it wished to settle,” according to the Chamber’s account, a characterization that is Sysco’s litigation position rather than a settled finding[s]. The same anxiety drives a parallel trend the Bloomberg Law analysis flagged for 2026: management services organizations, vehicles that let outside investors own the back-office functions of law firms, blurring the line between financier and firm[s].
Patent Cases, Foreign Money, and National Security
Patent and intellectual property litigation sits at the center of a separate worry. Patent cases drew 19% of funded capital in 2023 and 27% of commitments in 2025, a large enough share that lawmakers have begun asking who, exactly, is behind the money. The concern is that a foreign-controlled funder could use discovery in a U.S. patent case to reach sensitive technology. The Chamber’s legal-reform arm points to PurpleVine IP, a Chinese firm that in 2023 financed patent suits against Samsung and “may have received and relied upon privileged, confidential, and highly sensitive information,” a tie that surfaced only because the presiding Delaware judge required disclosure of funding[s]. Separately, reform groups cite reporting that an investment firm tied to sanctioned Russian figures funded U.S. and U.K. litigation to work around sanctions.
The evidence here calls for restraint. The American Security Project, which is broadly sympathetic to disclosure rules, concedes there is no public proof that a foreign adversary has actually used litigation funding to steal protected technology, that the extent of the threat “is unclear and will remain so” under current court rules, and that supporters reasonably argue a profit-seeking funder has little incentive to bankroll losing harassment suits[s]. The risk is real as a possibility; it has not been documented as a pattern.
The 2026 Reckoning Over Litigation Funding
The policy fight intensified in Washington over the past year. A provision by Sen. Thom Tillis (R-NC) that would have taxed litigation finance profits was folded into the Senate version of the One Big Beautiful Bill before the Senate parliamentarian struck it out, killing the effort[s]. A companion measure, the Tackling Predatory Litigation Funding Act, as introduced, would strip funders of capital-gains treatment and tax their proceeds as ordinary income plus a 3.8% surcharge, according to the Chamber’s reform arm[s]. Rep. Ben Cline (R-VA) introduced the Protecting Our Courts From Foreign Manipulation Act, which, as introduced, would bar sovereign wealth funds and foreign governments from funding U.S. lawsuits, a measure Bloomberg Law called a direct threat to large funders such as Fortress and Burford Capital because of their sovereign-wealth ties.
Disclosure is the other front. In early 2026 Sen. Chuck Grassley (R-IA) introduced the Litigation Funding Transparency Act of 2026, which, as introduced, would force parties in class actions, multidistrict litigation, and proceedings of 100 or more cases to reveal whether a funder is “a foreign state, a foreign person, a sovereign wealth fund, or a commercial enterprise that is owned or controlled by a foreign entity,” with the courts publishing updated lists every 120 days[s]. The bill aligns with the Justice Department’s FARA unit, which in a June 2024 advisory opinion concluded that a U.S. law firm funded by a foreign organization to pursue impact litigation had to register as a foreign agent.
States have moved faster. New York enacted Assembly Bill 804C/Senate Bill 1104 in December 2025, requiring that “all terms, charges, and cumulative repayment amounts must be plainly stated and initialed by the consumer,” giving borrowers ten business days to cancel, barring funders from steering settlements, and requiring every funding company to register[s]. Georgia passed Senate Bill 69, establishing that a funder’s recovery cannot exceed the plaintiff’s own, and Oklahoma passed a Foreign Litigation Funding Prevention Act requiring disclosure of foreign-backed finance[s].
The industry has not stood still, and one notable move was over numbers. Westfleet declined to publish industry-wide assets under management for the first time in its 2025 report, saying the figure is “not a reliable measure” and has been “frequently misunderstood or mischaracterized in public policy debates”[s]. Its chief executive, Charles Agee, told Bloomberg Law the $16.1 billion number had been used “in bad faith” by opponents “to try to scare the public.” Over the same period the 200 largest U.S. law firms cut their share of new commitments from 37% to 24%, a drop of 13 percentage points, as scrutiny mounted and portfolio conflicts surfaced[s]. Funding has also won unexpected defenders among conservative nonprofits wary of new federal mandates.
What Comes Next
The securitization push suggests the asset class is settling in rather than receding. The Market Securities analysis treats legal-finance ABS as a permanent fixture, which would weave lawsuit cash flows into the same insurance and pension portfolios that fund retirements. Insurers, meanwhile, are fighting on the opposite flank: the chief executives of Chubb and Marsh & McLennan pledged in a Wall Street Journal op-ed to keep pressing against the funding industry, and more lobbying is expected through 2026.
The 119th Congress has until January 3, 2027 to act on the pending bills, and a midterm calendar crowded with other fights leaves a narrow window. Whatever passes, the underlying shift is already done. Litigation funding has made personal injury and mass tort claims into instruments that institutions can price, rate, and trade. The open question in 2026 is no longer whether a lawsuit can be an asset. It is who has to say so out loud, and how much of the award reaches the person who was actually harmed.
